IHH Healthcare Q0F 0.00% has more than doubled its earnings for the 3QFY2023 ended Sept 30 to RM532.1 million ($152 million)ompared to RM251.8 million for the same period last year, boosted by operational growth from higher patient volumes and revenue intensity from higher acuity treatment.

 

Accordingly, earnings per share also increased to 6.04 sen for the quarter compared to 2.78 sen in 3QFY2022

 

For the same period, IHH revenue increased by 27% to RM5.8 billion on higher revenue intensity across all markets as more patients were seen.

The company&rsquo s net operating income, which reflects its core performance, was up by 17% y-o-y to RM368.9 million in 3QFY2023.

 

On Aug 29, IHH declared an interim cash dividend of 3.5 sen per share that was paid on Oct 27.

 

The company says it is confident of its organic growth trajectory and will continue to manage costs efficiently by expanding bed capacity, driving inpatient volume growth, upgrading facilities and equipment to provide better patient care and cater to demand and enhance revenue intensity 

 

Over the next five years, IHH is planning on increasing its bed capacity by some 33%, adding 4,000 new beds across Malaysia, India, Hong Kong, Turkey and Europe.

 

Overall, IHH expects continued revenue growth and double-digit return on equity (ROE), while maintaining prudent capital management and mitigating inflationary and interest rates pressures.

IHH Healthcare has announced the proposed divestment of Fortis Malar Hospital, Chennai and its related assets by subsidiary Fortis Healthcare.

 

The proposed divestment to MGM Healthcare will be undertaken for an aggregate consideration of some INR1.28 billion ($20.6 million).

 

The divestment includes the business operations of Malar Hospital as well as the land and buildings of the hospital and its adjacent and related real estate assets.

 

AN INDIRECT, wholly owned subsidiary of IHH Healthcare : Q0F +0.59% is seeking 20 billion yen (S$179.5 million) in damages from Japanese pharmaceutical company Daiichi Sankyo, the group said on Tuesday (Nov 14).

 

Northern TK Venture (NTK), which filed the claim in the Tokyo district court on Oct 16, alleged that Daiichi Sankyo caused losses by preventing NTK from proceeding with open offers to buy a stake in Fortis Healthcare in 2018.

 

On top of the damages, NTK is seeking an injunction to stop Daiichi from making defamatory remarks in the future regarding the open offers. It also wants Daiichi to publish a statement on its website and on the Securities and Exchange Board of India (Sebi) to vindicate NTK&rsquo s reputation.

 

NTK&rsquo s court filing was delivered to Daiichi Sankyo by the court on Nov 13, IHH said. It does not expect the claim to have any material operational or financial impact on the group.

 

To recap, IHH Healthcare halted its open offer to buy an additional stake in Fortis after the Indian Supreme Court put the sale on hold in December 2018. This came after Daiichi initiated contempt proceedings against Fortis to maintain status quo on the deal with IHH.

 

The Japanese drugmaker had argued that certain transactions between IHH and Fortis violated the court&rsquo s directions.

 

MALAYSIAN hospital operator reported a 51 per cent drop in net profit to RM301.8 million (S$87.9 million) in the second quarter ended Jun 30, 2023, from RM612.1 million in the year-ago period.

 

This was due mainly to &ldquo a high base last year when we had exceptional gains&rdquo , the group said in a bourse filing on Tuesday (Aug 29).

 

Earnings per share for the period stood at 3.43 sen, compared with 6.69 sen per share in the same period a year earlier.

 

Revenue in Q2 grew 7 per cent to RM4.7 billion, from RM4.4 billion previously. The increase came from higher patient volumes and revenue growth across all markets, IHH said.

 

The board has declared an interim dividend of 3.5 sen per share, which will be paid out to shareholders on Oct 27. No dividend was declared in Q2 2022.

 

For the six months ended Jun 30, 2023, net profit grew 53 per cent to RM1.7 billion, from RM1.1 billion previously. Revenue in H1 2023 stood at RM9.8 billion, up 15 per cent from the preceding period&rsquo s RM8.5 billion.

 

&ldquo Moving ahead, we expect continued revenue and ROE (return on equity) growth,&rdquo said Joe Sim, group chief operating officer (COO) at IHH.

 

In a separate statement on Tuesday, IHH announced that Sim has resigned from his position as group COO to return to the public service.

 

Sim, who joined IHH in 2017 and was appointed group COO on Jan 1, 2020, was chief executive officer at the National University Hospital from March 2009 to September 2016.

 

IHH also said that Prem Kumar Nair, who is CEO of IHH Healthcare Singapore, will be appointed group CEO from Oct 1.

 

Dr Nair&rsquo s appointment follows the surprise departure of former group CEO Kelvin Loh in February.

 

Prior to joining IHH in 2020 in his current role, Dr Nair held the roles of chief corporate officer and managing director of Singapore healthcare at Raffles Medical Group from 2015 to 2017.

 

&ldquo Dr Nair is a physician and healthcare executive with an illustrious career of over three decades in both the public and private healthcare sectors,&rdquo IHH said.

 

The group will &ldquo continue its organic growth path&rdquo by expanding its bed capacity by some 25 per cent &ndash or close to 3,000 new beds &mdash across Malaysia, India, Turkey and Europe over the next three years.

 

Other initiatives will include driving productivity and operational efficiencies by increasing occupancy rates and reconfiguring its portfolio to remove underperforming assets, IHH said.

 

HOSPITAL operator IHH Healthcare, which is dual-listed on both sides of the Causeway, has agreed to buy another 24.5 per cent equity stake in India healthcare chain Ravindranath GE Medical Associates (RGE) for 7.4 billion rupees (S$121 million) in cash.

 

With the acquisition, IHH&rsquo s stake in the company will be bumped up to 98.2 per cent from 73.6 per cent, allowing the Malaysia-registered group to assume full control of RGE&rsquo s operations.

 

Announcing this in a bourse filing on Friday (Aug 25), the group said RGE group has been a &ldquo key asset&rdquo for IHH since its initial investment in 2015, adding that it has built a strong reputation for providing comprehensive multi-organ transplant services.

 

The move is IHH&rsquo s attempt to strengthen RGE group&rsquo s operations and expand its market position, as part of the group&rsquo s commitment to the India healthcare sector, it said.

 

IHH had held its 73.6 per cent stake in RGE through its indirect wholly-owned subsidiary GDPL and Parkway-Healthcare (Mauritius).

 

The 24.5 per cent stake will be bought over from Dr Ravi Group. Of this stake, 13.18 per cent is directly held by RGE&rsquo s namesake doctor Dr Ravindranath Kancherla, 1.51 per cent by his wife Adilakshmi, 1.03 per cent by his daughter Lakshmi Sailaja, and 8.8 per cent by his company Global Hospitals.

 

The purchase consideration, the group said, was arrived at on a willing buyer, willing seller basis after taking into account the fair market value of RGE shares.

 

Apart from the RGE shares acquisition, IHH also made two other ancillary transactions with Dr Ravi Group.

 

One was to buy a 0.32 per cent equity stake held by Adilakshmi in a direct subsidiary of RGE called Global Clinical Research Services at a cash consideration of about 72,000 rupees.

 

The other relates to a purchase by RGE of a parcel of land and existing building in Chennai, India, that is used for RGE&rsquo s hospital operations for 305.5 million rupees. The land is currently owned by Dr Ravindranath&rsquo s daughter-in-law.

 

IHH, meanwhile, noted that the transactions are not expected to materially change the risk profile of the business of the group, as it is already the majority shareholder of RGE. RGE will continue its current line of business after the transactions complete, it added.

 

IHH Healthcare Q0F 0.00%   has reported earnings of RM1.55 billion ($466.4 million) for the FY2022 ended Dec 31, 2022, 16.9% lower than FY2021&rsquo s earnings of RM1.86 billion.

 

FY2022 revenue grew by 5% y-o-y to RM18.0 billion as the group&rsquo s core non-Covid-19 revenues recovered when local and foreign patients returned for treatment at the group&rsquo s hospitals. The ramp-up of operations at GHK Hospital as well as the acquisitions of DDRC SRL Diagnostics, General Hospital Acibadem Bel Medic in 2021 and the acquisition of Ortopedia Ozel Saghk Hizmetleri Anonim Sirketi in 2022 also contributed to the increase.

 

The revenue growth was partly offset by lower contributions from Covid-19 related services during the 4QFY2022.

 

Excluding the application of MFRS 1291 reporting standard, FY2022 revenue grew by 6% y-o-y to RM18.1 billion.

 

Other operating income fell by 31% y-o-y to RM497.8 million as FY2021 had a high base which included the remeasurement to fair value of interest in DDRC SRL of RM86.1 million. FY2021 also had a gain on disposal of Continental Hospitals and Apollo Gleneagles Hospital. FY2022, however, registered higher foreign exchange (forex) gains of RM82.0 million.

 

Earnings per share (EPS) for the FY2022 stood at 17 sen.

 

As at Dec 31, 2022, cash and cash equivalents stood at RM3.66 billion.

 

A first and final dividend of 2.16 cents has been declared for Singapore Exchange (SGX) shareholders while a first and final dividend of 7 sen has been declared for Bursa shareholders. The dividend, which represents a 17% increase y-o-y, will be paid on April 28.

 

Looking ahead, the group says it expects its inpatient revenue to grow post Covid. It also remains confident of its long-term growth trajectory, which is underpinned by the megatrends in healthcare and its strong financial position.

Further to its statement, the group announced that it will develop its laboratory business into a distinct, core platform to provide end-to-end services to patients and clients for seamless care.

 

As at Dec 31, 2022, the group&rsquo s occupancy stood at 70%, with 223,397 inpatient admissions. It has 11,881 operational beds as at end-December and 23.4 million lab tests during the period.

 

THE surprise departure of IHH Healthcare&rsquo s : Q0F -2.19% head honcho Kelvin Loh comes on the back of a string of boardroom changes at one of the world&rsquo s largest private healthcare behemoths. The 49-year-old healthcare veteran was also believed to have been on leave since early January prior to his &ldquo voluntary resignation&rdquo , according to sources.

 

The news of the immediate resignation of the company&rsquo s managing director and chief executive officer took the market by surprise on Wednesday (Feb 22) evening.

 

IHH is one of the world&rsquo s largest private healthcare operators and dual-listed in Malaysia and Singapore with a market value of nearly S$16 billion.

 

The reason for Dr Loh&rsquo s long leave prior to his resignation could not be ascertained. The Business Times&rsquo (BT) queries to the company on the matter did not draw further comment.

 

On boardroom changes, the sector heavyweight replied &ldquo no&rdquo to details of any disagreement between Dr Loh and the company&rsquo s board and likewise to whether there are any matters that need to be brought to shareholders&rsquo attention.

 

BT further understands that IHH carried out an internal inquiry in relation to some &ldquo governance matters&rdquo , but the exact nature of the probe is not known. The company did not respond to BT queries on the matter.

IHH, which counts Japan&rsquo s Mitsui & Co as its single largest shareholder, followed by Malaysia&rsquo s sovereign wealth fund Khazanah Nasional, has yet to fill its top executive post. This in itself could suggest a sudden move.

 

When Dr Loh took over the reins from IHH&rsquo s long-serving boss Tan See Leng (now Singapore&rsquo s Manpower Minister and Second Minister for Trade and Industry) three years ago, his appointment as chief executive-designate and executive director followed some six months before that.

 

Dr Tan&rsquo s departure from IHH was also announced on the same day and months ahead of the expiry of his employment contract, in what appeared to set in motion a smooth succession and clarity in top leadership.

 

Following Wednesday&rsquo s announcement, there is a vacuum in IHH&rsquo s top seat at a time when the healthcare giant with a big appetite for buyouts is seeing an uptick in patient volumes and bed occupancy rates in this post-pandemic era, even as it faces headwinds from rising operating costs and nursing shortages.

 

IHH shares were down S$0.040 or 2.19 per cent at S$1.79 around noon. The healthcare firm boasts of sizeable operations in several key markets, chiefly Singapore, Malaysia, Turkey and India. This includes 82 hospitals in 10 countries and 15,000 licensed beds. For the nine months ended September 2022, IHH earned a net profit of RM1.4 billion (S$422.9 million) on the back of RM13 billion revenue.

 

On Thursday, IHH issued a statement that it has accepted Dr Loh&rsquo s resignation and appointed group chief operating officer Joe Sim to take over Dr Loh&rsquo s duties. &ldquo Dr Loh has decided to step down after more than three years at the helm. The board has begun the search for a potential successor ... In the interim, it is working closely with Sim and the rest of the IHH management team to ensure a seamless transition,&rdquo it said.

 

Interestingly, since late last month, IHH has had a slew of boardroom changes. The most significant of these changes involved the resignation of Takeshi Saito as IHH&rsquo s non-independent and non-executive director on Jan 27.

 

According to IHH&rsquo s announcement, Saito&rsquo s departure followed his resignation as nominee director of MBK Healthcare Management (MHM). Wholly owned by Mitsui & Co, MHM is IHH&rsquo s major shareholder with a 32.8 per cent stake. Saito continues to serve as chief executive of MHM, which is based in Singapore and manages the healthcare assets of Mitsui&rsquo s portfolio.

 

Saito, like Dr Loh, is a healthcare veteran. He is also a Mitsui long-timer, and in fact led the Japanese giant&rsquo s original RM3.3 billion investment in IHH back in 2011. Seven years later, Mitsui would pick up a bigger chunk of IHH from Khazanah as the Malaysian state-investment firm was rejigging its portfolio. With that, it deposed Khazanah as IHH&rsquo s largest shareholder.

 

&ldquo As one of the biggest private hospital groups in Asia, IHH Healthcare is set to serve as the foundation of Mitsui&rsquo s Asia-wide healthcare infrastructure. And it all started from the passion of one man: Takeshi Saito,&rdquo said Mitsui on its website under &ldquo People&rdquo .

MALAYSIAN hospital group IHH Healthcare : Q0F -2.16% reported a 54 per cent slide in its net profit for the third quarter ended Sep 30. This was due to the absence of exceptional items recognised in Q3 2021, including an increase in deferred tax assets of RM248.2 million (S$75.6 million), as well as foreign exchange losses and the effect of restating financial statements according to a reporting standards framework in hyperinflationary Turkey.

 

Net profit for the quarter stands at RM251.8 million, from RM550 million in the same period last year, the group announced in a bourse filing on Tuesday (Nov 29).

 

For the first nine months of the year, net profit came in at RM1.36 billion, a 4 per cent year-on-year drop from RM1.41 billion.

 

Revenue for Q3 grew by 3 per cent to RM4.6 billion, from RM4.4 billion in the previous corresponding period.

 

This brings revenue for the first nine months to RM13.1 billion, or 4 per cent higher year on year from RM12.7 billion.

 

Earnings per share for Q3 2022 fell to 2.78 sen, from 6.01 sen in Q3 2021. It now stands at 14.82 sen for the first nine months of the year, versus 15.3 sen in the year-ago period.

 

The group said revenue growth was mainly due to the strong recovery from core non-Covid-19 revenues as both local and foreign patients returned to seek treatment at its hospitals. However, these were partially offset by lower contributions from Covid-19-related services rendered in Q3 2022, as well as the disposal of Continental Hospitals in India on Dec 14, 2021 and a partial lockdown in China.

 

The weakening lira also eroded the revenue and earnings growth of its operations in Turkey.

 

The group expects non-Covid business to grow with improvements in patient volume and bed occupancy rates. It said foreign patient volume has recovered close to pre-pandemic levels, mitigating the effects of lower revenues from Covid-19-related services, which has largely dissipated.

 

IHH Healthcare managing director and chief executive officer Kelvin Loh said in a statement that the group is taking steps to ensure that its operations can cater for demand in its core business.

 

&ldquo The group&rsquo s long-term growth trajectory remains positive, underpinned by favourable healthcare megatrends and our robust financial position,&rdquo he said.

MALAYSIAN hospitality group IHH Healthcare&rsquo s discussions to fully acquire Ramsay Sime Darby Health Care (RSDHC) for RM5.67 billion (S$1.83 billion) have been terminated, announced the healthcare provider on Friday (Sep 9).

 

Earlier in March this year, the group revealed it had submitted a confidential, conditional, non-binding, indicative proposal to Australian multinational healthcare provider Ramsay Health Care and Malaysian trading conglomerate Sime Darby Holdings (SDH) for the acquisition.

 

Then, it said that discussions were preliminary and that no agreement had been reached yet.

 

IHH in its latest update announced that such discussions have concluded without resulting in a binding agreement.

 

RSDHC, a 50:50 joint venture between Ramsay and SDH, operates hospitals in Indonesia and Malaysia, a nursing college in Malaysia, and a day surgery facility in Hong Kong.

 

DBS Group Research was positive on news of IHH&rsquo s potential acquisition when it was announced in March, as it believed the group and RSDHC had complementary portfolios and that the deal could draw further synergies from a bigger and stronger cluster of hospitals.

 

RSDHC was also said in 2020 to have been planning an initial public offering in Malaysia that could raise some US$300 million, although such plans were later reported to have been put on hold.

A US court has granted IHH Healthcare&rsquo s motion to dismiss a suit brought against it by US fund Emqore Envesecure Private Capital, the mainboard-listed company disclosed in a Friday (Sep 9) bourse filing.

 

Emqore sought over US$6.5 billion in damages in a lawsuit against IHH Healthcare and other defendants. Emqore&rsquo s claims involved the issuance of shares of Fortis Healthcare to IHH&rsquo s subsidiary in 2018.

 

The fund alleged that it suffered losses as the defendants had allegedly conspired to frustrate a proposed share acquisition transaction between Fortis Healthcare and Emqore&rsquo s supposed predecessors.

 

IHH Healthcare in January filed a motion to dismiss the suit for lack of personal jurisdiction and failure to state a claim under the Federal Rules of Civil Procedure.

 

In Friday&rsquo s filing, the company said the court&rsquo s granting of the motion is subject to certain conditions. The parties have a right to reopen the lawsuit, upon showing good cause for it, if there is a failure to comply with 2 conditions.

 

The defendants must consent to the jurisdiction of Indian courts and agree to accept service of process in India in any civil action filed by Emqore on their claims in this matter. They also must consent to waive any statute of limitations defences that would not have applied as of the date of filing of the action.

IHH said it has been advised by its US counsel that Emqore has a right to appeal against the court&rsquo s order. The company is seeking legal advice on the appropriate steps in the event of an appeal by Emqore.

 

MALAYSIAN hospital group IHH Healthcare : Q0F +3.66% reported a 27 per cent rise in its net profit for the second quarter ended Jun 30, due mainly to an exceptional gain of RM295.5 million (S$91.8 million). This arose from restating financial statements according to a reporting standards framework in hyperinflationary Turkey.

 

This brought net profit for the quarter to RM612.1 million, from RM483.3 million in the same period last year.

 

Stripping out the effect from the application of Turkey&rsquo s reporting framework, net profit is 17 per cent higher at RM566.2 million, said the group in a bourse filing on Thursday (Aug 25).

 

Net operating income fell 32 per cent to RM317.5 million due to lower EBITDA and adjustments relating to reporting standards in Turkey for depreciation and amortisation.

 

For the first half, net profit came in at RM1.1 billion, a 29 per cent increase from RM858.9 million in the year-ago period.

 

Revenue for Q2 grew marginally by 2 per cent to RM4.37 billion, from RM4.27 billion in the previous corresponding period.

 

This brings its first-half revenue to RM8.54 billion, or 4 per cent higher year on year from RM8.22 billion.

 

Earnings per share for Q2 2022 rose to 6.69 sen, from 5.26 sen in Q2 2021. It now stands at 12.05 sen for the first half of the fiscal year, versus 9.29 sen in the year-ago period.

 

The group said growth came mainly from the recovery in core non-Covid-19 revenues as both local and foreign patients returned to seek treatment at its hospitals. 

 

The continuous ramp-up of operations at Gleneagles Hong Kong Hospital and the acquisition of General Hospital Acibadem Bel Medic in Serbia last July also contributed to the revenue increase, although these were partially offset by lower contributions from Covid-related services rendered in the quarter, as well as effects from the disposal of Continental Hospitals in December 2021.

 

The weakening Turkish lira also eroded the revenue and EBITDA growth of the group&rsquo s Turkey operations.

 

In Q2, it entered into an agreement to sell its medical educational arm, International Medical University (&ldquo IMU&rdquo ), for a total enterprise value of RM1.35 billion proceeds will be deployed to optimise operations and clinical services and for investments &ldquo into new growth peaks&rdquo .

 

Pantai Hospital Penang also started building a new medical block, which is expected to be completed by end-2024.

 

In Turkey, the group signed an agreement for the purchase of Orthopedia Hospital in Adana in early August.

 

IHH Healthcare managing director and chief executive officer Kelvin Loh said in a statement that Q2 2022 was the group&rsquo s &ldquo Covid inflexion&rdquo quarter, with its core business recovering as patients returned in strength, offsetting the anticipated melt-off in Covid-19-related services.

 

&ldquo With strong cash flow and operating synergies, we are now embarking on further growth initiatives by exploring earnings-accretive opportunities and improving returns,&rdquo said Loh.

 

&ldquo While we expect near-term headwinds including inflation, higher interest rates and currency volatility, we are confident in our ability to provide long-term value for all stakeholders.&rdquo

 

HOSPITAL group IHH Healthcare : Q0F +1% is selling its medical education arm International Medical University (IMU) for RM1.35 billion (S$421 million) to a consortium of investors led by The Rise Fund, TPG&rsquo s multi-sector global impact investing platform, and the Hong Leong Group.

 

IHH Healthcare, Asia&rsquo s biggest hospital group by market value, said it entered into a conditional share sale agreement to dispose 1.1 million ordinary shares of IMU, representing its entire issued ordinary share capital, to Inbound Education Holdings.

 

The sale includes a hospital that IMU owns, which is under construction.

 

Other units in the IMU group of companies include a private medical university, a nursing college, and a dialysis centre.

 

Hong Leong and The Rise Fund each own approximately 45 per cent of Inbound Education, a private company incorporated in Malaysia in March 2022.

 

IMU is the largest medical and healthcare-focused higher education institute in Malaysia and its under-construction hospital will be acquired by Columbia Asia as part of the transaction, IHH said.

 

The transaction is expected to complete by the first quarter of 2023.

 

IHH said the divestment is a continuation of the group&rsquo s strategy to drive capital-efficient growth, and will allow it to focus on strengthening healthcare operations in existing markets, as well as extend its footprint into adjacent markets.

 

IHH chief executive officer and managing director Kelvin Loh said: &ldquo This recalibration of our portfolio is a considered decision as part of our new strategy. We will deploy the proceeds to optimise our operations and clinical services plus invest into new growth peaks for IHH.&rdquo

 

Of the investment in IMU, TPG senior adviser Ali Redhauddin Tuanku Muhriz said: &ldquo This investment is part of a thematic focus globally on professional education in the medical sector and will be a strong addition to the extensive healthcare and education portfolio that TPG has both globally and in Malaysia.&rdquo

MALAYSIAN hospital group IHH Healthcare on Thursday (May 26) reported a 31.3 per cent increase in its net profit for the first quarter ended Mar 31, as the company witnessed growth from core operations and contribution from Covid-19 services rendered.

 

Net profit for the quarter went up to RM493.3 million (S$154.9 million), from RM375.6 million over the same period last year. 

 

Revenue for the period grew as well, by 5.5 per cent to RM4.16 billion, from RM3.95 billion in the year-ago period.

 

Earnings per share rose to 5.36 sen, from 4.04 sen the year before.

 

In a bourse filing, the group attributed the higher revenue largely to recovery from local patient revenue, contribution from Covid-19 related services rendered and a continuous ramp-up of operations at Gleneagles Hong Kong (GHK) Hospital.

 

Acquisitions of medical scanning and testing centre DDRC SRL Diagnostics in Kerala, India, last April and General Hospital Acibadem Bel Medic in Serbia last July also contributed to the increase, it pointed out.

 

The growth in revenue was, however, dampened by the effects of the disposal of Continental Hospitals in December last year and the temporary closure of all clinics in China for a period in March, following a spike in the number of Covid-19 cases in Shanghai, it noted.

 

In a statement, IHH Healthcare managing director and chief executive officer Kelvin Loh said the group is &ldquo nimbly adapting to the new normal&rdquo moving forward, adding that it is pursuing new growth opportunities by developing its laboratories segment, among others.

 

&ldquo We see growth in (the laboratories segment&rsquo s) underlying core business and will work towards becoming a global laboratories service provider, backed by our deep clinical know-how and capabilities,&rdquo he added.

 

In the short term, however, he said IHH Healthcare may experience some headwinds with the melt-off of its Covid-19 related revenues and from global inflationary pressures.

CEO Kelvin Loh says scale, strategy put medical group in competitive position

IHH Healthcare : Q0F -0.47% is among the companies that have experienced a good run since the start of the Covid-19 pandemic. Now, as infection numbers ease across the world, chief executive officer and managing director Kelvin Loh is expecting a normalisation of the services that the medical services and facilities group provides. Meanwhile, the group is rolling out a new strategy for growth.

 

Shares of IHH have gained 21.4 per cent in the last 12 months, tracking the company' s improvement in profitability as services linked to Covid-19 grew.

 

The Singapore-listed shares of the counter closed last Friday (Apr 29) at S$2.10. The counter is also listed on Bursa Malaysia, where it closed at RM6.61 - giving it a market capitalisation of RM58.2 billion (S$18.5 billion).

 

IHH reported revenue of RM17.1 billion for FY2021 - higher even than its pre-pandemic revenue of RM14.9 billion for FY2019. It had reported a slight dip in revenue - to RM13.4 billion - in FY2020.

 

Operating efficiencies allowed IHH to report substantial improvements in profitability. For FY2021 ended December, IHH&rsquo s net profit came in at RM1.9 billion - up from RM288.9 million the previous year. Even after excluding exceptional items, net profit rose substantially from RM715.3 million to RM1.6 billion.

 

Loh said Covid-19-related services accounted for about 15 per cent of IHH&rsquo s topline for FY2021.

 

While he expects this portion of revenue will &ldquo fall off&rdquo in the first half of 2022, the group will be able to score new revenue streams from &ldquo elective patients&rdquo who had surgeries deferred due to the pandemic.

 

What will help the group through the gradual decline in pandemic-related revenue is its &ldquo robust strategy&rdquo , said Loh.

 

&ldquo (This) strategy rides on the long term mega trends...which are in turn unaffected by the short term headwinds,&rdquo he said. Such mega trends include the ageing population, the advancement of medical science, as well as the personalisation of medicine, which refers to the ability to customise medical care down to the &ldquo individual level&rdquo .

 

A refreshed strategy

 

When IHH announced its FY2021 results on Feb 23, the company also unveiled a new strategy to deliver sustainable growth for all its stakeholders. Dubbed " Care. For Good." , the strategy has 4 pillars: building trust, delivering on global synergies, growth through 5 engines, and a compelling sustainability strategy. The 5 engines are: recovering from Covid-19, achieving organic growth, acquiring strategic assets, developing the laboratory business, and driving innovation and digital transformation.

 

Loh said the planning for this strategy began 2 years ago, when he first assumed the role of IHH&rsquo s chief executive.

 

&ldquo At that point in time, we already saw ourselves as a global operator of hospitals. We are of a scale that is&hellip not easily matched,&rdquo he said. He nevertheless acknowledged that the company could do more for the healthcare sector and its customers.

 

One pillar of the revised strategy is focused on delivering the right care to patients at an &ldquo appropriate price&rdquo . As &ldquo throngs of patients&rdquo showed up at IHH hospitals&rsquo emergency departments through the pandemic, the first thing the company did was to ensure they could be kept safe &ndash which built trust between the group and its patients.

 

Technology also came into play here. &ldquo Because of operating scale, you will recognise that the healthcare delivery process is actually complex,&rdquo said Loh, noting that the process requires a significant amount of know-how, IT systems, as well as the ability to manage supply chains across multiple countries.

 

Technology helps IHH predict the size of hospital bills using factors such as a patient&rsquo s condition, age and situation &ndash with an accuracy of up to 80 per cent.

 

&ldquo So we can tell the patient upfront &ndash this is your bill size and this is likely your outcome,&rdquo said Loh, adding that this adds to the group&rsquo s transparency.

 

The company is also looking at ramping up its organic growth through improving bed occupancy rates across hospitals and better utilising existing capacity.

 

Strategic acquisitions

 

On Mar 22, IHH submitted a proposal to buy Ramsay Sime Darby Health Care (RSDHC), a joint venture company owned by Ramsay Health Care and Sime Darby Holdings, for a price tag of RM5.67 billion. This appears to be part of the company&rsquo s strategy to make &ldquo strategic acquisitions&rdquo to accelerate its growth.

 

Loh said the group will acquire assets based on a &ldquo cluster&rdquo strategy &ndash meaning it will identify metro clusters in areas where it already has 2 or 3 hospitals that are doing well. Some areas he cited included Kuala Lumpur, Delhi and Singapore, where acquisitions would &ldquo complement&rdquo the cluster that IHH has built.

 

According to the company&rsquo s website, IHH has 16 hospitals in Malaysia. The acquisition of RSDHC will add one more hospital to IHH&rsquo s footprint there.

 

&ldquo We have ample debt headroom. I think we have a balance sheet that enables us to make acquisitions and this will help us accelerate our growth,&rdquo said Loh.

MALAYSIAN hospital group IHH Healthcare : Q0F 0% is offering to buy Ramsay Sime Darby Health Care (RSDHC) for RM5.67 billion (S$1.83 billion) on a cash-free, debt-free basis, according to a bourse filing on Tuesday (Mar 22).

 

The target company is a 50:50 joint venture between Australian multinational healthcare provider Ramsay Health Care and Malaysian trading conglomerate Sime Darby Holdings (SDH).

 

The healthcare business operates hospitals in Indonesia and Malaysia, a nursing college in Malaysia and a day surgery in Hong Kong.

 

IHH said it had submitted a confidential, conditional, non-binding, indicative proposal to Ramsay and SDH for the acquisition, noting that current discussions are preliminary and that no agreement has been reached yet.

 

In a separate bourse filing on the Australian Securities Exchange, Ramsay said that, together with SDH, it had agreed to a period of exclusivity for 4 weeks when due diligence commences to allow IHH to conduct due diligence and negotiate a sale and purchase agreement.

 

DBS Group Research is positive on the proposed acquisition, as RSDHC and IHH have complementary portfolios and the deal could draw further synergies from a bigger and stronger cluster of hospitals.

 

The research team also noted that RSDHC' s Malaysia hospitals are reputable and well-located, adding that the proposed acquisition would mark IHH' s first foray into Indonesia and potentially drive medical tourism referrals to Malaysia and Singapore.

 

Hong Leong Investment Bank Research analyst Sophie Chua said IHH' s acquisition is in line with its strategy to strengthen its presence in the Klang Valley area.

 

RSDHC has 4 medical centres in Klang Valley: Subang Jaya Medical Centre, Ara Damansara Medical Centre, ParkCity Medical Centre and Bukit Tinggi Medical Centre.

 

All are in urban areas and cater more to the premium segment, especially the ParkCity Medical Centre in Desa ParkCity.

 

" In terms of the transaction price, I think that it will be considered reasonable if the acquisition price is between 20 times and 30 times of the company&rsquo s enterprise value to earnings before interest, taxes, depreciation and amortisation," Chua added.

 

RSDHC was set up in 2013 to hold Sime Darby and Ramsay' s combined portfolio of hospitals in South-east Asia. According to Sime Darby' s annual report, the unit posted an 11 per cent growth in revenue to RM1.06 billion for the financial year ended 2021.

 

In 2020, RSDHC was said to be planning an initial public offering (IPO) in Malaysia that could raise about US$300 million, according to people with knowledge of the matter. But the company last month said it had decided to put its IPO plans on hold.